Government is meaningless, except as a sucker in my Ponzi scheme…

If you or I wanted to build a house, out in the middle of nowhere, and asked the local government to build us a road, or garage, and then give you the ability to set and collect your own taxes- we’d be laughed at.

However, when Randy Gunlock, of RG Properties, wants to build, the local governments all fall all over themselves to give poor Mr. Gunlock all the help and support he needs. You want an intersection- here you go, you need roads, of course, retaining ponds for runoff, don’t worry Mr. G we’ve got you covered, a parking garage- we’ll build it- and let you run it, and pay us with “payments in lieu of taxes” and when you’ve paid it off- it’s yours.

Oh, and what does Mr. Gunlock have to promise in return? Well, it’s really not spelled out. It’s all one directional. Tax dollar amounts are clear- rights to Mr. Gunlock are clear- responsibilities of Mr. Gunlock? Penalties for non-performance- Hah!

If I were a full-time reporter for a real newspaper, I’d not only have all these documents provided to my readers to analyze- I’d also have a complete timeline of all the real estate transactions in the area of the Austin Road interchange going back over the last twenty years. It’s a large undertaking- but when we look at the tens of millions of dollars that have been funneled that way- and how most of it has gone into the pockets of a select few- but mostly Mr. Gunlock’s pocket- it should be a cause for a major investigation. However, I’m just the local alternative news source- very part time, not making a dime for crawling under the veil of bull crap that’s fed the community- so you only get what I can stumble across and work with what is fed to me.
Like the “memorandum of understanding” between RG Properties and Miami Township and the TID that arrived Thursday in an unmarked envelope.

But before I try to dissect that lopsided deal with the devil, we’ve got to look at the propaganda coming out of the local “economic development” cartel- from the Dayton Daily News- and just remember, propaganda always works best when it’s based on fear:

Joe Tuss, the county’s assistant administrator, said the presence of any jobs at the Austin Interchange adds up to economic development because many of the companies moving there were considering leaving the area altogether. He said businesses have invested close to $90 million for buildings near the interchange in addition to the $75 million in public funds that paid to build the interchange and relocate and widen nearby roads and utilities.

Local companies, including Moto-man Robotics and Teradata have moved to the Austin Boulevard Interchange area. A law firm, Thompson Hine LLC, recently announced plans to move more than 100 workers from downtown Dayton to new office space near the interchange.

A development agreement between Montgomery County, Miami Twp., Miamisburg, Springboro, the Montgomery County Transportation Improvement District and developer R.G. Properties Inc. to develop 1,200 acres around the new highway interchange calls for the work to create 20,000 jobs there by 2029. The agreement does not stipulate that the jobs must be new to the region. Nearly 70 percent of the 1,200-acre development is in Miami Twp. and the rest is in Springboro and Miamisburg.

Jobs were just one of the goals for building the interchange. Proponents sought an I-75 interchange at Austin Pike for more than two decades as a way to ease traffic congestion on Ohio 725 and Ohio 741 near the Dayton Mall and to open up development opportunities in southern Montgomery County from Miamisburg to the Warren County line. One of the primary goals was to make southern Montgomery County more competitive in attracting businesses.

“What we’re trying to do is provide the best alternative for people to be in Montgomery County,” said R.G. Properties’ CEO Randy Gunlock. “Whether that alternative is used by existing businesses or new businesses is somewhat irrelevant.”

This week Miamisburg’s city council approved $4 million in financing to buy 81 acres of land along Byers Road near the intersection. City officials say they hope to sell the land this year to an unnamed developer….

Gunlock said governmental boundaries are meaningless to business owners and retaining companies is as important as creating new jobs. Gunlock said the Austin Interchange is doing both.

“Of course this is economic development,” he said. “Our job as a developer is to provide the best opportunity for businesses to flourish and that’s what we’re doing. How would you feel if we could have retained the jobs from NCR that moved to Atlanta?”

via Dayton Daily News Archive of Past Articles | Austin project better at keeping jobs in area.

One must ask how a city council can legally buy 81 acres of land, without clearly expressing what the public need is for this purchase- and how it can be based on a “hope to sell” to an “unnamed developer.” If that doesn’t set off immediate questions of legality and integrity of public officials, I don’t know what else does. Since when did your tax dollars become fair game for real estate speculation?

Gunlock’s quote about governmental boundaries being meaningless – right before talking about retaining NCR-  is laughable. Gunlock is the master of playing one governmental boundary against another in the location of his developments. If governmental boundaries truly didn’t matter, he should be the first on the bandwagon for regional government and reduction of governmental overhead.

But feudal warfare is great for the king of the tax abatement, and Mr. Gunlock has plenty of experience from dangling super WalMarts to communities across the Midwest- he’s now perfecting his art on the misguided local Podunk authorities, while recreating in his indoor ice rink in his back yard.

Looking over the “Memorandum of Understanding” between RG, the TID and Miami Township Trustees– due to be voted on this Tuesday, one has to wonder what are we getting in return for this massive tax dollar donation to RG?

Section B:

Pursuant to a Memorandum of Understanding dated November 26, 2008 among Developer, the TID, the Township, the Board of County Commissioners of Montgomery County, Ohio (the “County”), the City of Miamisburg and the City of Springboro, the parties have proceeded with the implementation of a master plan based on a preliminary conceptual plan prepared by the Developer for the Property and other land owned by Developer in the area of the Austin Road interchange, and Developer has obtained from the Township appropriate zoning of the Property supporting a mixed use development as contemplated by the master plan.

So despite having zoning and planning authorities- we’ve let RG do the plan for us. No leadership at all on what is best for the region that already has an abundance of vacant commercial and residential space due to population stagnation and sprawl.

F. The Township and the TID believe that the Phase II improvements will promote the highest and best use of the land through the development of amenities and employment opportunities that will encourage knowledge workers to live, work and recreate in the Township and benefit the entire region. To that end, the TID and the Township are willing to pursue and provide financial support for the public infrastructure improvements supporting the development of the Property which will, in turn, support the entire Austin interchange area.

Two things should set alarms off: “highest and best use” is a purely subjective statement- lacking any proof of need. If in fact all these people do come to the “Township” – it will break the threshold of population and should be converted into yet another city. Secondly- “encouraging knowledge workers” is a total flight of fancy, with no substantive description of what a “knowledge worker” is- or what they bring to the table. Because of these two clauses- we’re opening up our wallets to give money to RG Properties.

H. Developer recognizes that the obligation of the public parties to commit to finance the Phase II public improvements is based on Developer’s commitment to develop and construct the Phase II private improvements set forth in this Memorandum.

The public parties have an obligation- the developer only has a commitment. No contract. The difference in words is vast in a court of law- one must perform, the other only says he will.

Then comes the escape clause:

I. The Parties desire to enter into this Memorandum to memorialize certain understandings relating to the scope of Phase II and the Parties’ respective obligations relating to the Phase II development. The Parties recognize, however, that certain sources of funding have not yet been fully developed, and a more detailed agreement will need to be entered into when the funding sources are fully identified and the requirements relating to that funding can be addressed in greater detail.

What are the “certain understandings”- and why aren’t they spelled out? In other words, Gunlock can’t and won’t swing this deal until he’s shown that the government is going to back his project with a bunch of money down. When was the last time the government financed 20% or more of your business- with only promises of future performance?

So what is RG to build in phase two for these “knowledge workers”

NOW, THEREFORE, in consideration of the mutual benefits and obligations contained in this Memorandum, the Parties agree as follows:
1. Developer’s Phase II Obligations. Subject to the terms of this Memorandum, Developer agrees to proceed with the construction and completion of the following private improvements on the Property (the “Phase II Private Improvements”):
(a) The “Village Area” and adjacent retail area consisting of approximately 70,000 square feet of retail building area on the first floor and approximately 186 residential apartment units on floors 2 through 4 above part or all of the retail buildings;
(b) A 14 screen cinema adjacent to the Village Area; and
(c) An office building with a minimum of 120,000 square feet.
The Phase II Private Improvements, together with an approximately 520 space parking structure that will be subject to real estate taxation, will have a minimum value of $50,000,000.00.

So- 70,000 additional square feet of retail area- because we don’t have enough at the Dayton Mall?

14 more movie screens- because the Rave Cinemas at the Dayton Mall plus the Danbury- aren’t enough movie screens? Remember how we used to have movies in the Dayton Mall, but they were forced out by Shocase Crosspointe, which was then closed because of the Rave Cinema complex? How many movie screens do we need- especially since movie attendance has been dropping? So a 120,000 square foot office building is really the only thing that provides “knowledge worker” amenities- and – don’t worry- that garage, we’ll come back to it…

Because- the taxpayers are really paying $10 mill to build the garage and roads and parks:

2. Phase II Public Improvements. Subject to the terms of this Memorandum, the Township (with the cooperation of the TID) agrees to undertake $10,000,000.00 of public improvements on or supporting the Property, to consist of the following (the “Phase II Public Improvements”):
(a) Public street and utility improvements in the areas shown on Exhibit B attached to this Memorandum (the “Roadway Infrastructure”);
(b) One parking structure adjacent to the Village Area (the “Parking Structure”) as shown on Exhibit B; and
(c) Park improvements in the Village Area (the “Park Improvements”).
The Phase II Public Improvements also may include other related amenities and costs

Because, no matter what the developer does- the Twp. is going to build the garage gratis:

The Parties agree that it is impossible at the execution of this Memorandum to predict all of the factors that will impact the timing and development of the Phase II Private Improvements and the Phase II Public Improvements. The parties agree to be flexible and work cooperatively as the project moves through the stages in order to maximize the development potential of the Property. For example, the parties may agree to delay or accelerate the timing of certain Phase II Private Improvements to correspond with the Phase II Public Improvements. Notwithstanding the foregoing, the Township agrees to commence construction of the Parking Structure no later than August 1, 2011.

Yep- we build- RG does what they please- because it is “impossible to predict all of the factors.” Hmm- I always thought contracts were contracts and laid out specific duties and obligations- but this is a memo- for the developer only.

In section 4:

(b) The Parking Structure will be financed through the TID’s issuance of bonds pursuant to an agreement (“Cooperative Agreement”) among the Developer, the TID and the Township. Under the Cooperative Agreement, the Township will commit to make all payments of principal and interest on the bonds issued by the TID, and will pledge its available non-tax revenues to the funding of such payments, such non-tax revenues consisting of payments in lieu of taxes received by the Township under the applicable TIF arrangements that include the Property.

I will skip another section that is critical- to finish off the garage deal:

7. Parking Structure. The Parties intend that the Parking Structure funded by public funding, as part of the Phase II Public Improvements, will be owned by a public authority during the useful life of the structure (or, if permitted by law, the term of the bonds), with management obligations delegated to Developer pursuant to a management agreement. Under the management agreement, Developer will have the ability to establish rules that limit the use of the Parking Structure to specific users in the development during business hours, but be open to the public after business hours. If necessary in order to permit this arrangement, the Parking Structure funding shall be handled through taxable bonds rather than tax exempt bonds. The management agreement will place all costs of operation, maintenance, repair and other costs and expenses of the Parking Structure upon the Developer. At the end of the term of the management agreement, title to the Parking Structure shall be transferred to Developer.

Translation: Tax dollars build it. Payments in lieu of taxes pay the taxpayers back, and when it’s paid off, RG Properties owns it free and clear. And, by the way, all parking revenue- goes to RG Properties as well.

So, you build your house, pay for it money that should have been paid as taxes and at the end you own it free and clear? Am I missing something?

And the last- OMFG moment- RG Properties gets to create their own city- and levy their own taxes to maintain this property:

6. Establishment of New Community. Subject to the adoption of certain modifications to the Ohio law governing new communities, and subject to the approval of the affected retailers on the Property, Developer agrees to submit the retail and hospitality portions of the Property to a new community, the terms of which shall be mutually acceptable to Developer and the Township. The new community authority established for the new community shall have the right to levy a service charge in an amount up to one-half of one percent of the sales generated from the new community area up to a maximum of $500,000.00. The sales to which the service charge would apply would include all sales that are subject to state sales tax, specifically excluding food sales for off-premises consumption, but specifically including hotel room receipts and theater admissions and concession sales. Any such revenue shall be made available to Developer to apply toward the costs of operating and maintaining the Phase II Public Improvements, with any balance to be applied to the repayment of the Township’s obligations as described in Section 4.

A population of voters that allows this kind of transference of wealth from the taxpayer to the wealthy, without protest, deserves a country with a junk bond credit rating. There is zero reason for this deal to be approved, nor is there ANY guaranteed payback to the taxpayers.

There are no clauses to hold the developer liable or responsible for anything, other than to build buildings. No guarantees of tax revenues, or jobs or even payback for investments made by the taxpayer if the developer doesn’t go through.

Just like handing Bernie Madoff money with promises of a return, this deal has no guarantees. We know where Madoff’s victims ended up- in the very same poorhouse our local governments are headed to. RG Properties has nothing on the line, we have it all.

I’m sure there are other aspects to this deal my readers know more about- please feel free to comment freely, your personal information will be protected. Feel free to email or mail me any more supporting documents.
Thank you to my confidential source for forwarding this memo.


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